European private equity firm Silverfleet Capital has agreed to sell global meat casing supplier Kalle Group to a fund managed by Clayton, Dubilier & Rice (CD&R). The reported €500 million deal is expected to provide Silverfleet with an investment multiple of 3.5 and an internal rate of return (IRR) of 22.5%.

Bought by Silverfleet in 2009 from Montagu Private Equity for €212.5 million, Kalle Group has grown to have 16 production facilities in nine countries with sales in more than 100 global markets. Since 1997, the company has doubled its turnover to reach €281 million last year on the back of its extensive R&D initiatives launching new products and its expansion into high growth markets including South America and Asia.

Silverfleet has played a role in driving this expansion and strengthening of the company’s market position, and, in 2010, acquired the U.S.-based meat casing manufacturer Jif-Pak which fueled further growth for Kalle in the U.S. market.

Within recent years, the company’s growth has also been attributed to its launch of a number of innovative value-added casing products that can transfer smoke, color, or seasoning onto the sausage filling during the cooking process – an ability that significantly cut production costs. A key to the company being a leading innovator in the industry is the fact that it reinvests a significant portion of its annual turnover to its R&D programs, leading to one-quarter of all its revenue currently being generated by product innovations developed over the past decade according to the company.

Thanks to its innovative capability, which is unique within the industry, Kalle is constantly bringing new top-selling products to market,” said Guido May, a partner at Silverfleet Capital in a company statement.  “Kalle is now excellently positioned as a leading global supplier of industrially produced casings for meat products. The prospects for continued growth over the coming years are thus very good.”